Correlation Between Cbd Life and Galexxy Holdings

Can any of the company-specific risk be diversified away by investing in both Cbd Life and Galexxy Holdings at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Cbd Life and Galexxy Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cbd Life Sciences and Galexxy Holdings, you can compare the effects of market volatilities on Cbd Life and Galexxy Holdings and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Cbd Life with a short position of Galexxy Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cbd Life and Galexxy Holdings.

Diversification Opportunities for Cbd Life and Galexxy Holdings

-0.04

Correlation Coefficient

Cbd Life  Galexxy Holdings

Good diversification

The 3 months correlation between Cbd and Galexxy is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Cbd Life Sciences and Galexxy Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galexxy Holdings and Cbd Life is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Cbd Life Sciences are associated (or correlated) with Galexxy Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galexxy Holdings has no effect on the direction of Cbd Life i.e., Cbd Life and Galexxy Holdings go up and down completely randomly.

Pair Corralation between Cbd Life and Galexxy Holdings

Given the investment horizon of 90 days Cbd Life is expected to generate 1.17 times less return on investment than Galexxy Holdings. But when comparing it to its historical volatility, Cbd Life Sciences is 1.69 times less risky than Galexxy Holdings. It trades about 0.11 of its potential returns per unit of risk. Galexxy Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.80  in Galexxy Holdings on December 1, 2024 and sell it today you would lose (0.10) from holding Galexxy Holdings or give up 12.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Cbd Life Sciences  vs.  Galexxy Holdings

Cbd Life Sciences

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cbd Life Sciences are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental indicators, Cbd Life disclosed solid returns over the last few months and may actually be approaching a breakup point.

Galexxy Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Galexxy Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Galexxy Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cbd Life and Galexxy Holdings

The main advantage of trading using opposite Cbd Life and Galexxy Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cbd Life position performs unexpectedly, Galexxy Holdings can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Galexxy Holdings will offset losses from the drop in Galexxy Holdings' long position.

The idea behind Cbd Life Sciences and Galexxy Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.